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Market Commentary: Friday, January 17/20


Hog futures are trading mixed, mostly lower. There continues to be underlying concern about the long-term availability to move pork to China even after the implementation of the phase one trade agreement. There seems to be a "once burned" mentality when it comes to China following through on expected trade agreements. This has not changed even though there are signatures on trade agreements. As any businessperson knows, an agreement is only as good as the parties making it, or each of their lawyers in the worst-case scenario. This has created even more questions to add to the growing list, as answers seem few and far between.

Cash hog bids are called $1 lower to $1 higher with most bids expected steady. Prices are higher on the National and unreported on the Iowa Minnesota morning reports. The morning cutout value is sharply lower.  

The Canadian Dollar is trading lower against the US dollar at midday. 

For Friday, January 17, the Western Hog Exchange OlyWest 19 base price is $1.417/kg dressed. The OlyWest 19 weekly price is $1.400/kg dressed. This is Kerrie Simpson reporting from the Western Hog Exchange. 

Weekly Regional HOG PRICE Report


Things to Consider….

Late last week the USDA released final 2019 Crop Production numbers, Grain Stocks, WASDE and Winter Wheat plantings.  Given the turbulent year and ongoing uncertainty around the USDA monthly projections, the market believed the January production numbers would shed more light on a year that was considered by many to be a struggle.

The USDA reported some surprises, particularly corn production, which came in at 13.692 billion bushels due to an increase in yield (168 bu per acre)     overshadowing a reduction in harvested acres.  Trade estimates were for corn to come in around 13.513 billion.  The increase in harvested production and 107 million bushel increase in Dec 1 stocks (on and off farm) weighed on futures most of this week. Corn futures as illustrated by the July 2020 contract below have had low volatility until this week but is still considered to be a stable market.

Soybean yield in the latest report came in at 47.4 bushels per acre, and soybean production was estimated at 3.558 billion bushels while trade expectations prior to the report were near 3.512 bil bu.  Dec. 1 stocks for soybeans were estimated at 3.252 billion bushels compared to 3.746 billion in the last report. Soymeal as a result of the recent reported numbers is expected trade stead firm as has been the trend for the last 45 days.

Winter wheat acres were also reported last week coming in at the lowest level in over 100 years.  Total planted winter wheat acres were estimated at 30.804 million, the lowest since 1909.     Poor fall conditions were citied as the reason for the reduced acres.

The Canadian dollar traded to its highest level in a year surpassing 77.00 cents US for the first time in nearly 2 years.  The move higher in the Loonie certainly is not helpful with cash hog prices however for those interested in securing soymeal or other US based feed ingredients, now is an excellent time to take advantage of the strong dollar and relatively low grain prices, particularly corn and soymeal.

January 14, 2020

Weekly Hog Price Recap

Regional and national cash hog values improved the majority of the week however heavy declines Friday offset much of the overall strength. Packer cash bid volume was considered moderately light, excluding higher volume Tuesday and Wednesday. CME cash by comparison reported more moderate daily moves. Wholesale pork values varied throughout the week, however weakness in picnics, butts and loins pushed pork cutout $0.70/cwt under the previous week. 

Monitored Canadian hog markets generally improved $1.50 to $4/hog from week ago levels, excluding values out of Quebec which dropped more than $5/hog. Hylife rose $1.50/hog, while Maple Leaf markets each climbed $2/hog. Values out of Ontario improved more than $3.50/hog while the OlyW 19 was up closer to $4/hog. In the US, Tyson strengthened $3/hog while JM climbed $1/hog.

Weekly Hog Margins

Monitored hog margins generally strengthened on rising hog values, with Canadian markets receiving further support from the improved currency rate of exchange. Additionally, farrow-to-finish feed costs decreased $0.50/hog on either side of the CAN/US border in monitored regions.

Margins out of the OlyW 19 and those out of Ontario strengthened the most, each rising around $4/hog to near $26/hog losses. Margins out of Maple Leaf each improved around $2.50/hog from the previous week, with the Sig 5 reaching its strongest value since the start of November at near $34.50/hog losses. Only margins out of Quebec weakened from a week ago, down $5 to $6.50/hog losses. In the US, Tyson margins strengthened more than $4/hog while JM improved near $1.50/hog.

US Regional Margins 

  • Tyson: $ (16.84) USD X 1.3027 = $ (21.94) in Canadian Dollars
  • Morrell: $ (21.44) USD X 1.3027 = $ (27.93) in Canadian Dollars

Disclaimer: Commodity Professionals Inc. presents this report as a snapshot of the market using current information available at the time of the report. These findings are for informational purposes only and should not be reproduced or transmitted by any means without permission.     Commodity Professionals Inc. does not guarantee, and accepts no legal liability arising from or connected to, the accuracy, reliability, or completeness of any material contained in the publication.